Thursday, March 7, 2019

qualification of auditor under companies act 2013

qualification of auditor under companies act 2013

Qualification of a Company auditor
The auditor of a company must possess the qualification prescribed by Section 141 of Companies Act 2013, The prescribed qualifications under Section 141 (2) are as under
(1) Chartered accountants in practice

A person who is a chartered accountant within the meaning of Chartered Accountants Act, 1949 and holds a certificate of practice.

(2) Partnership firm of chartered accountants in practice
A partnership firm where majority of partners practicing in India are chartered accountants holding certificate of practice, may also be appointed as an auditor of a company In such a case, the appointment of an auditor may be made in the name of the firm and any partner may act in its name
(3) Where a firm including a limited liability partnership 
is appointed as an auditor, only the partners who are chartered accountants would be authorised to act and sign on behalf of the firm

According to Section 141 (3), the following persons are debarred from being appointed as auditors of a company

(1) A body corporate other than a limited liability partnership registered under the Limited Liability Partnership Act, 2008

( 2) An officer or employee of the company

(3) A person who is a partner or who is in the employment of an officer or employee of the company

(4) A person who or his relative or partner
 is indebted to the enmpany for an amount exceeding 5,00,000 or has given guarantee in connection with indebtness of third person for an amount exceeding Rs100000
A person or a firm who, whether directly or indirectly, has business relatianship with the company, or its subsidiary, or its holding or asscciate company or suhsidiary of such holding company or associate Company or such Nature as my be  prescribed

A person whose rclative is a director or is in the employment of the Company as a director or key managerial personnel
A person who is in full time empleyment elsewhere or a person or a partner of a firm holding appointment as its auditor, if such persons or partner is at the date of such appointment or reappointment holding appointment as auditor of more than twenty companies

A person who has been convicted by a court of an offence involving fraud and a period of ten years has not elapsed from the date of such convictian

Any person whose subsidiary or associate company or any other form of entity, is engaged as on the date of appointment in consulting and specialised services as provided in Section 144

Antomatic Vacation on becoming disqualified

Where an auditor incurs any of the above disqualifications after his appointment he has to vacate his office as auditor Such Vacation is deemed to be a casual vacancy in the office of the auditor Sec. 141

Appointment of Auditors-Sec. 139

Appointment by Directors:
The first auditor of a company other than a Government company, shall be appointed by the Board of Directors with in 30 days from the date of regisiration of the company. But if Board fails to appoint such auditor, it shall inform the members of company, who shall with in 90 days at an extraordinary general meeting appoint such auditor, and, such auditor shall hold affice till the conclusion of the first annual first annuàl general meeting
Appointment of Auditor in case of Government Companies

The first anuditor shall be appointed by the comptroller and Auditor. General of India with in 60 days from the date of registration of the company. If CAG fails in this respect the Board is to appoinf the auditor with in 30 days, and if the Board also fails to do so it has to inform the members of the company who shall appoint such auditor within 60 days at an extraordinary meeting: who shall hold the office till the conclusion of the first annual general meeting

Subsequent appointment of auditor in case Govt. Companies Sec. 141(s)

(i) The auditor shall be appointed by CA.G. with in 180 days from the Commencement of financial year and

(il) The appointed auditor shall hold the office till the conclusion of the annual genreal meeting

CasualVacancy [Sec. 139(8)] (Appointment by Shareholders)

Any casual vacancy in the office of an auditor is to be filled by the Board of Directors within 30 days. If such casual vacancy is caused by resignation of an auditor the appointment would have to be approved by the company in general meeting with in 3 months of recommendation of the board he will hold office till the conclusion of next A.G.M
Where the company's accounits have to be audited by CAG, the vacancy is to be filled by CAG (comptroller and Auditor General of India) within 30 days if CAG fails to do so the Brard will fill the vacancy with in next 30 days. The Tenure of auditorship would be till the conclusion of next AGM

Subsequent Auditors (appointment by shareholders)

(i) Every company shall at the first annual general meeting appoint an auditor Set. 139

(ii) The auditor so appointed by memhers shall hold office from the conclusion of that meeting till the conclusion of its Sixth annual general meeting

(ii) But such appointment shall be subjoct to ralification in every annual general meeting till the sixth such meeting by way of passing an ordinary resolution

(iv) The company shall obtain a written cansent and a certiticate as to the fulfilment of conditions laid down u/s 141 from the auditor

(v) The company shall inform the auditor about his appointment

(vi) The company shall file a notice of such appointment with the Registrar with in 15 days of the meeting in which auditor is appointed

Retiring Auditor Re-appointment: ISec. 1939 

A retiring auditor may be re-appainted at an annual general meeting, if

he is not disqualified for re-appointment

he has not given the company a notice in writing of his unwillingness to re-appointed; and

 A special resolution has not been passed at the meeting appointing some other auditar or providing expressly that he shall not be re-appointed Even for re-appointment of a retiring auditor, passing of resolution is essential. There can not be any automatic re-appointment 

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